Pfizer Inc. (PFE) beat its EPS estimates by 27% in the 2022 third quarter. Moreover, the U.S. Food and Drug Administration recently granted Emergency Use Authorization to PFE and BioNTech SE’s (BNTX) Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine, the third 3-µg dose in the three-dose primary series for children aged six months to four years of age.
This approval is yet another feather in the cap of PFE. The company has been a significant beneficiary of the pandemic.
In addition, PFE has been outperforming the broader market. PFE has gained 50.5% over the past five years and 9.6% over the past month, while the SPDR S&P 500 Trust ETF (SPY) has gained 49.5% over the past five years and marginally over the past month.
PFE has gained 9.2% over the past three months and 4.4% over the past six months to close the last trading session at $52.16.
Furthermore, the stock has a spectacular dividend-paying record. PFE has paid dividends for 33 consecutive years. Its dividend payouts have increased at 5.7% CAGR over the past five years. Its current dividend yield is 3.14%, and its four-year average yield is 3.63%.
Here is what could shape PFE’s performance in the near term:
Solid Bottom Line
For its third quarter that ended October 2, 2022, PFE’s United States segment revenues came in at $13.85 billion, up 97.3% year-over-year.
Its non-GAAP net income came in at $10.17 billion, up 39.7% year-over-year. Its non-GAAP EPS came in at $1.78, up 40.2% year-over-year. Moreover, its income from continuing operations came in at $8.64 billion, up 5.8% year-over-year.
Attractive Valuations
PFE’s forward EV/Sales of 2.94x is 26.2% lower than the industry average of 3.99x. Its forward EV/EBITDA of 6.62x is 50.2% lower than the industry average of 13.30x.
Also, its forward Price/Sales of 2.93x is 33.7% lower than the industry average of 4.42x, while its trailing-12-month Price/Cash Flow of 11.01x is 37.9% lower than the industry average of 17.73x.
Robust Profitability
PFE’s trailing-12-month gross profit margin of 66.17% is 19.7% higher than the industry average of 55.29%. Its trailing-12-month EBITDA margin of 44.81% is substantially higher than the industry average of 3.73%, and its trailing-12-month net income margin of 29.81% is higher than the negative industry average of 5.94%.
In addition, its trailing-12-month ROCE, ROTC, and ROTA of 35.59%, 20.30%, and 15.24% compared with the negative industry averages of 39.69%, 21.95%, and 31.22%, respectively.
POWR Ratings Reflect Promising Outlook
PFE has an overall rating of A, which equates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. PFE has an A grade for Value, consistent with its lower-than-industry valuation multiples.
It has a B grade for Growth and Quality, in sync with its solid bottom line growth in the latest reported quarter and higher-than-industry profitability margins, respectively.
In the 160-stock Medical – Pharmaceuticals industry, PFE is ranked #2.
Click here for the additional POWR Ratings for PFE (Momentum, Stability, Sentiment).
View all the top stocks in the Medical – Pharmaceuticals industry here.
Bottom Line
PFE registered solid financials in its latest quarter. Moreover, PFE is trading above its 50-day and 200-day moving averages of $46.74 and $49.16, respectively. Given the stock’s solid momentum and robust fundamentals, PFE is expected to beat the market in the coming years. Therefore, it might be an ideal buy now.
How Does Pfizer Inc. (PFE) Stack up Against Its Peers?
While PFE has an overall POWR Rating of A, one might consider looking at its industry peers, Novo Nordisk A/S (NVO), Bristol-Myers Squibb Company (BMY), and Johnson & Johnson (JNJ), which have an overall A (Strong Buy) rating.
PFE shares were trading at $53.33 per share on Tuesday morning, up $1.17 (+2.24%). Year-to-date, PFE has declined -6.75%, versus a -13.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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